JH C.S.H.B. 3531 75(R) BILL ANALYSIS URBAN AFFAIRS C.S.H.B. 3531 By: Ehrhardt 5-5-97 Committee Report (Substituted) BACKGROUND The Texas Capital Trust Fund was established as a repository of proceeds from the sale of certain state lands and real assets. Use of the fund has been restricted to certain state agencies for acquisition and improvement of facilities subject to appropriation for that use by the Legislature. The fund is held held in the State Treasury and income from the fund is assigned to the General Revenue Fund. Fund balances in excess of $500,000,000 are targeted for biennial sweeps into the General Revenue Fund. (This has never occurred and such a balance is not in any projection.) One state agency (The Texas Department of Mental Health and Mental Retardation) presently utilizes the capacity of this funding mechanism for active facility improvement by aggressively pursuing real property sale and lease. Most revenue projected for this fund during the next few years will result from a new law which encourages effective asset management of the state's real property. The Texas Housing Trust Fund is established "to provide loans, grants, or other comparable forms of assistance to local units of government, public housing authorities, nonprofit organizations, and income-eligible individuals, families, and households to finance, acquire, rehabilitate, and develop decent, safe and sanitary housing." Presently this is the only direct state contribution made available to Texans in the pursuit of adequate, affordable housing. Recent study indicates that the need for such funding is critical and that the balance of the fund is inadequate to this need. PURPOSE This substitute for HB 3531 would permit state agencies to continue aggressive asset management and permit continued use of the proceeds from the sale or lease of real property for facility acquisition, construction and improvement as appropriated by the legislature. Funds which result from the asset management program of Texas Department of Mental Health and Mental Retardation (MHMR) and are not appropriated to that agency by the legislature will be dedicated to programs for the housing of persons with mental illnesses or mental retardation. Income from the fund would continue to flow to the General Revenue Fund. No provision would remain to "sweep" to the benefit of the General Revenue Fund. Annual transfers would be made by the Comptroller of Public Accounts of all unencumbered and unappropriated funds, to the benefit of the Texas Housing Trust Fund. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1.Allows capital trust fund to be transferred to housing trust fund. SECTION 2. Requires comptroller to annually transfer unappropriated or unencumbered balances in capital trust fund to housing trust fund. Repeals current law provision requiring balance in excess of $500 million to be transferred to general revenue fund. SECTION 3. Requires portion of housing trust fund derived from TDMHMR activities to be used for housing programs for persons with mental illness or retardation. SECTION 4. Effective date of September 1, 1997. SECTION 5. Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The substitute retains current law regarding use of capital trust fund and allows transfer to housing trust fund. The substitute deletes current law provision regarding transfer of fund balance in excess of $500 million to general revenue fund. The substitute deletes proposal in the original to make quarterly transfers. The substitute adds Section 3 of the bill.